Interpretation · Jan 20
Floor. ~40 min: R2d § 202 + In re Motors Liquidation. The doctrine the next class assumes you have covered.
Target. ~75 min: Floor + R2d § 203 + synthesis.
Courts resolve ambiguity from the inside out. Intrinsic evidence — the words of the contract — comes first.
Three intrinsic layers (R2d § 202(1): read the contract as a whole, giving effect to all terms):
(1) Words and other conduct are interpreted in the light of all the circumstances, and if the principal purpose of the parties is ascertainable it is given great weight.
(2) A writing is interpreted as a whole, and all writings that are part of the same transaction are interpreted together.
(3) Unless a different intention is manifested,
(a) where language has a generally prevailing meaning, it is interpreted in accordance with that meaning;
(b) technical terms and words of art are given their technical meaning when used in a transaction within their technical field.
(4) Where an agreement involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection is given great weight in the interpretation of the agreement.
(5) Wherever reasonable, the manifestations of intention of the parties to a promise or agreement are interpreted as consistent with each other and with any relevant course of performance, course of dealing, or usage of trade.
In the interpretation of a promise or agreement or a term thereof, the following standards of preference are generally applicable:
(a) an interpretation which gives a reasonable, lawful, and effective meaning to all the terms is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect;
(b) express terms are given greater weight than course of performance, course of dealing, and usage of trade, course of performance is given greater weight than course of dealing or usage of trade, and course of dealing is given greater weight than usage of trade;
(c) specific terms and exact terms are given greater weight than general language;
(d) separately negotiated or added terms are given greater weight than standardized terms or other terms not separately negotiated.
The casebook groups twelve semantic canons into families. Think of them as tools, each suited to a job:
When semantic canons run out, courts turn to policy canons that resolve ambiguity by fairness, not by linguistics.
R2d § 206: "In choosing among the reasonable meanings of a promise or agreement or a term thereof, that meaning is generally preferred which operates against the party who supplies the words or from whom a writing otherwise proceeds."
447 B.R. 142 (Bankr. S.D.N.Y. 2011)
United States Bankruptcy Court for the Southern District of New York
Rule. Where a contract's plain text leaves a term ambiguous, courts apply intrinsic interpretive canons such as noscitur a sociis (a word is known by its companions) to construe related terms together. A term used in series with another carries the connotation of its neighbors.
Facts. A homeowner''s insurance policy covers losses caused by "fire, lightning, explosion, smoke, or other casualty." A burglar steals jewelry. The insurer denies coverage; the homeowner sues, arguing burglary is "another casualty."
Question. Apply ejusdem generis. Does theft fall within "other casualty"?
Answer. Ejusdem generis: a general term following a specific list takes its meaning from the class the specific terms share. Fire, lightning, explosion, and smoke are all physical, destructive, non-human-actor events. Burglary is an intentional act by a third party producing loss but not destruction; it shares none of those qualities. The general term takes the class character. No coverage. Compare with R2d § 203(c) (specific terms are given greater weight than general language).
Facts. A commercial contract''s arbitration clause covers "any dispute arising out of or relating to this agreement, including disputes about its formation, performance, or termination." Buyer sues seller for fraudulent inducement to enter the contract. Seller invokes arbitration; Buyer argues fraudulent inducement is a tort and falls outside the clause.
Question. Apply expressio unius. Does naming "formation, performance, or termination" exclude tort claims?
Answer. Expressio unius est exclusio alterius, the expression of one is the exclusion of others. The list of formation/performance/termination invites the argument that other categories (tort) are not covered. But the umbrella phrase "arising out of or relating to" is broad enough to defeat the canon; the list is illustrative, not exhaustive. Modern courts (and federal arbitration policy) typically read broad arbitration language to swallow tort claims tied to the contract. The canon yields to the broader textual signal.
The point: canons collide. Choosing which canon controls is itself an interpretive judgment, not a mechanical one.
Stretch problems from the chapter.
Rules. R2d § 202, R2d § 203.
Cases. In re Motors Liquidation Co..
Open question. Canons help when the dispute lives inside the writing. What if the dispute requires evidence from outside: trade usage, course of dealing, prior performance? Next class: extrinsic evidence and UCC § 1-303.
Next class: Extrinsic Evidence
_Interpretation_ · Jan 21
Read Nanakuli Paving v. Shell Oil and Wood v. Lucy, Lady Duff-Gordon. Asphalt buyers had a "posted price" contract; the trade understood that posted-price meant price-protection on prior orders. The writing was silent on it. When does what the parties did and what the trade does override what the writing says? Come ready to answer. You may be called.